Louisiana sugarcane industry concerned about infrastructure

To understand what's happening in the Louisiana sugarcane industry infrastructure, first focus on 2001-02, when growers planted just under 500,000 acres, the state's peak.

“Since then, we've had allotments which limited the production of sugar for states producing sugarcane and sugar beets,” says Ben Legendre, LSU AgCenter sugarcane specialist. “We reverted to base acres.”

By going with base acres, if Louisiana cane growers meet or exceed allotments, only those acres from the base would receive payment for their sugar. When this was being contemplated, many growers and mill personnel gathered “and discussed the fact that if farmers planted acreage over the allowed base, they might not get paid for the sugar produced from those acres.”

The designation quickly led to a decrease in sugarcane acreage. “What grower would plant an acre of cane and not be paid for the sugar? Who wants to put the inputs in and not be able to market their crop?”

In 2002, several hurricanes swept through the state and the residual effects were still being dealt with in 2003 and 2004. Then, in 2005, three additional hurricanes hit.

“Many folks don't remember Hurricane Cindy that struck southeast Louisiana several months before Katrina,” says Legendre. “And a lot of the 2006 yield was hurt by early freezes.”

Those weather events meant the state never reached its allotment. In fact, farmers could have kept almost every acre, base or not, in production and still been paid.

Also in the mix: Louisiana is a “proportionate share” state.

“If we fill the allotment, there was always a possibility they could come back and say, ‘Even though your base acreage is X, there could be proportionate shares which are based on your base acres. That could further reduce the amount of land you can grow cane on and sell sugar from.’

“That has never happened, thank goodness, and it doesn't appear to have a chance in the new farm bill. But who knows? If the same basic structure is kept, there's a chance farmers, based on their proportionate share, will be told how much sugar they can actually market.”

Since hurricanes Katrina and Rita ruined coastal Louisiana and Mississippi, residents of the region have moved inland. Even though New Orleans was devastated, areas just west of the city emerged intact.

And while Rita devastated the southern parishes like Cameron, southern parishes like Lafayette and Iberia weren't as inundated.

“A lot of former New Orleans residents have moved into Prairieville, Laplace and Baton Rouge. But they've also moved to New Iberia and Lafayette.”

The migration is often at the expense of cane land. “There isn't a lot of land available around Lafayette Parish that isn't in sugarcane. The same is happening in Iberia (the state's largest cane-producing parish) and St. Martin parishes, which have lost considerable acreage due to urban encroachment.

“The Youngsville area is a perfect example of this. Youngsville is unrecognizable from five years ago. There are tremendous amounts of building going on: condos, subdivisions, you name it.

“In St. Martin Parish, we've already lost at least a few thousand cane acres. When you add all that up, it's easy to see why cane acreage is being lost.”

The southern tier of cane-growing parishes is basically monoculture. There may be small acreages of soybeans, millet and wheat — but those are normally double-cropped with cane.

Meanwhile, St. Landry, Avoyelles and Rapides parishes contain some of the best cropping soils in Louisiana. Farmers there are able to grow high-yielding cotton, corn, milo, cane, and soybeans.

With the price of grain, those three parishes — which, three years ago had better than 50,000 acres of cane — have dropped cane acreage to around 35,000 acres.

“We've lost about 15,000 acres in those parishes alone,” says Legendre. “What will happen this year? The trend doesn't look very good for cane.

“If you go to traditional cane areas — say Lafayette Parish east to St. Mary Parish and the Mississippi River north to Point Coupee Parish — we've tried to grow other crops. What we've always found is that yes, those crops can be grown but they can't be harvested properly.”

This year, many of the soybeans planted in cane land were difficult to deal with. With heavy rains in late July and August, many of those beans stayed in the field and were never harvested.

“We've tried for years and years to grow crops other than cane in those (aforementioned) areas. We've found no crop that can compete.”

On the lip of the traditional cane area, though, there is competition from alternative crops. When the prices of grains are so high, it's much more lucrative to produce them over cane.

That's especially true because of the transportation costs. Now, Bunkie-area cane farmers often have to move crops over 100 miles to the nearest mill.

Further west, in the Calcasieu/Jeff Davis area, “there was a time we believed unlimited cane could be grown. Over 10,000 acres of cane were planted before it began to dip. Now, the acreage is down to around 6,000 to 8,000. The soils out west just aren't as fertile as those further east. The anticipated yields just didn't pan out as expected.”

At the same time, the Andino Energy Group from Columbia has invested in the Lacassine facility and bought land in the surrounding area to plant cane.

“Columbians bought the syrup mill the state first built for grinding cane for syrup around Lake Charles,” says Mike Salassi, LSU AgCenter economist. “Back then, the plan was to truck and/or rail the syrup to mills to make sugar.

“Now, the Columbian group plans to put in an ethanol plant that will grind cane and possibly sweet sorghum and make ethanol out of the juice. That's similar to the ethanol process in Brazil. A lot of people are wondering if that will be economical in the United States considering the equivalent price of sugar.

“In other words, if it costs a grower $500 to grow an acre of cane, it'll cost the same whether that cane is made into sugar or ethanol. So if you're going to make ethanol, you have to pay the grower something equivalent to what he'd make sending his crop to make sugar. Under conventional ethanol fermentation methods, we were under the impression molasses and corn are much cheaper feedstocks than sugarcane juice.”

One thing of interest is that the sugarcane the Columbians produce will be non-allotment. “It can be planted on as many acres as they want,” says Legendre. “It will be very interesting to see how that all shakes out.”

In recent years, mills in south Louisiana have consolidated, forcing some facilities to close. The consolidation has actually strengthened the industry remaining, says Salassi. “Those mills that were left have become larger, more efficient.

“About 70 percent of a sugar factory's total costs are fixed. To be economical, they must grind and send as much tonnage through that factory as possible. The more tonnage moving through, the lower the fixed cost per ton of cane.”

Over the years, the factories that have remained in business are those that have made improvements to increase capacity. And they're the ones that have been successful in getting more cane coming into the factory.

That trend will continue, says Salassi. “Over the last three years, two or three factories have closed. I suspect over the next decade, at least another couple will close.”

The marketing allotments supporting the price of sugar directly limit the quantity of sugar sold by the factories. That indirectly limits acres.

As long as those allotments are in place, “we can't just increase cane acres to make all the factories as cost-efficient as possible. That means there's tremendous competition for cane.”

The state is down to 11 factories that crystallize sugar. Some Louisianans think the number should drop to only a handful. They argue that would allow the remaining mills to grind over 1 million tons of cane, the oft-cited baseline for profitability.

“If, indeed, we retain the acreage in the traditional cane belt, most growers won't be interested in growing cane for ethanol unless the price paid for ethanol goes up dramatically,” says Legendre. “Even now, with the price of sugar generally below 21 cents per pound, it's still much better for us to grow cane for sugar.

“If we're able to find the methodology that works and is economically feasible to convert cellulose in bagasse to ethanol, we will be able to add value to the crop. We're working hard on that. Most mills produce excess bagasse — and could probably produce more with more efficient boilers — that can be converted to ethanol and that wouldn't take out any acreage out of sugarcane.”

“Energy cane” varieties have been commercially released over the last couple of years. Those produce more cellulose per acre at the expense of sugar.

Late last summer, Legendre was at a meeting in Michigan that addressed ethanol. “A guru of cellulosic ethanol was there and he made it clear that the technology is already available to convert bagasse or cellulose into ethanol. There are quite a few out there competing for that technology.”

The problem is converting it economically. “That's coming but currently enzymes are a problem because they're very expensive. That's what's keeping the cost up so much. The enzymes actually take the cellulose and convert it into fermentable solids. That isn't easily done and high-powered enzymes are required.

“We're still five to 10 years away, though, from finding a method or protocol that allows cellulose to be economically transformed into ethanol. But cost-effective cellulosic ethanol is coming.”